Storch Amini P.C. v. Schlachet

Full title: STORCH AMINI P.C., Plaintiff, v. DAVID SCHLACHET, Defendant.

Court: Supreme Court, New York County

Date published: Oct 6, 2023

2023 N.Y. Slip Op. 33524 (N.Y. Sup. Ct. 2023)

Opinion

Index No. 651911/2020

10-06-2023

STORCH AMINI P.C., Plaintiff, v. DAVID SCHLACHET, Defendant.

DEBRA A. JAMES, J.S.C.

Unpublished Opinion

PRESENT: HON. DEBRA A. JAMES Justice.

DECISION + ORDER ON MOTION

DEBRA A. JAMES, J.S.C.

The following e-filed documents, listed by NYSCEF document number (Motion 003) 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122 were read on this motion to/for JUDGMENT - MONEY.

Upon the foregoing documents, it is

ORDERED that the motion of plaintiff STORCH AMINI PC for a money judgment against defendant DAVID SCHLACHET on its second cause of action for constructive fraudulent conveyance in the amount of $301,780.85, and for an order directing defendant to turn-over to plaintiff all cash and securities in Steward Partners Investment Solutions Account No. X1700 is DENIED; and it is further

ORDERED that counsel are directed to post on NYSCEF a proposed preliminary discovery conference order or competing proposed preliminary discovery conference order(s) at least two days before October 24, 2023, on which date counsel shall appear via Microsoft Teams, unless such appearance be waived by the court.

DECISION

By Order entered on August 17, 2023, in the herein action, the Appellate Division, First Department reasoned:

The decedent judgment debtor's Individual Retirement Account (IRA) ceased to be exempt from application to the satisfaction of plaintiff's judgment upon her death, whereupon the assets of the IRA were no longer "held in trust for a judgment debtor" (CPLR 5205 [c]) . To the extent (Cohen Goldstein, LLP v. Schlachet, 200 A.D.3d 407, 154 N.Y.S.3d 778 [1st Dept. 2021]) held to the contrary, that holding should not be followed. Since the judgment debtor's IRA lost its exemption upon her death, and the gratuitous transfers from the IRA after her death rendered her estate insolvent, plaintiff has established that those transfers were fraudulent conveyances (see Van de Walle v. Van de Walle, 200 A.D.3d 1095, 10991100, 161 N.Y.S.3d 221 [2d Dept. 2021], Iv denied 39 N.Y.3d 908, 2023 WL 1827998 [2023]).

On its motion seeking entry of a money judgment, plaintiff has not annexed a copy of any judgment entered against Lara Prychodko, who is now deceased. Plaintiff correctly cites the decision of the Court of Appeals in American Sur Co v Conner, 251 NY 1, *7 (1929) for the proposition "We think the effect of these provisions is to abrogate the ancient rule whereby a judgment and a lien were essential preliminaries to equitable relief against a fraudulent conveyance." However, this court agrees with defendant that American Sur Co does not support plaintiff's contention that with respect to the underlying debt and its claim for monetary damages, plaintiff need not establish through admissible evidence the amount of the debt. The court likewise agrees with defendant that the decision of the Appellate Division, First Department, in the herein action merely held that the IRA transfers were fraudulent conveyances. Under American Sur Co, supra, while plaintiff is entitled to the equitable remedy that directs such "fraudulent 'conveyance(s). . . be set aside. . . to the extent necessary to satisfy [its] claim'" (see Matter of Application of City of Syracuse Industrial Development Agency, 156 A.D.3d 1329, 1332-1333 [4^th Dept 2017]) (1)(a) pursuant to Debtor & Creditor Law § 278, nothing in that opinion authorizes the court to enter judgment for a monetary amount in favor of plaintiff, without plaintiff proffering requisite proof of the amount of the claim.

In Constitution Realty v Oltarsh (309 A.D.2d 714, 715 [1^stDept 2003]), the court held that "'A court of equity. . . may award a personal judgment against a party in lieu of setting aside a transfer'", where the setting aside and attachment remedies are unavailing. The Constitution Realty court went on to state that given the "numerous questions of fact", a hearing was necessary to determine such damages. As argued by defendant, the issues of facts with respect to the extent to which the fraudulent conveyances impaired the value of the asset preclude summary disposition here.

In its reply affirmation, plaintiff alleges that Laura Prychodko "never disputed any of Plaintiff's invoices". Even considering plaintiff's statement made for the first time in further support of its motion (see Indymac Bank, FSB v Baroi, 214 A.D.3d 414, 415 [1^st Dept 2023]), this court finds precedent that plaintiff "cannot create an account stated so as to bind the estate of the deceased with respect to transactions in which the deceased [herself] had engaged during her lifetime." (In re Isaac's Estate, 34 Misc.2d 127 [Surrogate's Court, New York County 1962], citing Matter of Lopez, 274 A.D. 819).¹Finally, although plaintiff interposes a claim based upon the doctrine of necessaries ("Count" III of the subject complaint) under which Laura Prychodko received an award of the subject attorney's fees against defendant, no such determination has been made or included in the record before the court, and plaintiff presents no evidence supporting such an adjudication at this juncture. Moreover, an evidentiary hearing would be required to determine the appropriate award. See Frankel v Frankel, 2 N.Y.3d 601, 605 (2004).

1 The court notes that there is no account stated cause of action alleged in the complaint at bar.